The Eighties Club
The Politics and Pop Culture of the 1980s
Unleashing the Spirit: The Reagan Administration's Indian Policy
Jason Manning, 2001
In January 1983, President Ronald Reagan issued a statement that defined his administration's approach to Indian policy. In keeping with Reagan's "New Federalism," by which a federal government too large and intrusive by the president's standards would surrender some of its power and responsibilities to state and local governments, the statement focused on freeing American Indian tribes from the constraints placed on them by excessive federal regulation and a "self-perpetuating bureaucracy" that "promoted dependency rather than self-sufficiency." While acknowledging the federal government's responsibility to the tribes, Reagan's intentions were clear: To get government off the backs of the Indians while freeing the taxpayer from some of the financial burden of supporting the reservations. This would be accomplished "by removing the obstacles to [Indian] self-government and by creating a more favorable environment for the development of healthy reservation economies." (FN1) Self-sufficient tribes would be able to assume the responsibility for providing many of their own social services, which were costing the federal government approximately $3 billion a year.

While noting that the 1975 Self-Determination and Education Assistance Act, reflecting the Nixon administration's commitment to tribal self-government, had been a good start in the right direction, Reagan asserted that there had been more rhetoric than action in the government's commitment to tribal self-rule. His administration would take several crucial steps to accelerate the process of reservation self-government and self-sufficiency. These included the 1982 Indian Tribal Government Tax Status Act, creating new revenue-raising opportunities for tribes by permitting them to levy a tax on non-Indian companies operating on the reservations and allowing them to finance reservation projects with tax-exempt bonds; the 1982 Indian Mineral Development Act, which allowed tribes to enter into joint ventures with private business; the Small Tribes Initiative, offering financial support to tribes lacking functional tribal governments; and measures providing the private sector -- which was often justifiably leery of entering into contractual obligations with tribes -- new incentives for reconsidering investment in reservation enterprises. Other administration-supported legislation that proved beneficial to Indian self-determination were the 1988 Indian Self Governance Act and the 1988 Indian Gaming Regulatory Act.

In addition, Reagan made important symbolic gestures, such as transferring the White House liaison for recognized Indian tribes from the Office of Public Liaison to the Office of Intergovernmental Affairs, thereby restoring "tribal governments to their rightful place among the governments of this nation." Finally, Reagan expressed a desire to eliminate legal barriers and complex regulations that prevented tribes from "taking advantage of economic development opportunities," and established a Presidential Task Force on Indian Economies -- comprised of nine members, six of whom were American Indians -- charged with identifying barriers to tribal self-determination and recommending measures to collapse those barriers. Reagan also promised federal assistance in "developing the necessary management capability and in attracting private capital" by means of "seed money" earmarked for tribal use. (FN2)

In 1980 American Indians were the most disadvantaged minority in the United States. They had the lowest per capita income, the highest unemployment rate, the worst health and housing conditions, and the highest suicide rate in the country. In the previous decade alone the federal government had spent $30 billion to provide basic reservation services. But this clearly was not enough; the poverty rate among Indian families was three times that of non-Indian families. (FN3) Many Indians and non-Indians alike had concluded that economic development was the only viable avenue of escape from the dependency cycle that only perpetuated appalling reservation distress. Indian self-determination had been the declared policy of the previous four administrations, but it was time for bold new initiatives, less rhetoric and more action. Was Reagan's Indian policy the solution? Did tribes benefit from these policies during the 1980s? Clearly, the administration contributed to an unleashing of the entrepreneurial spirit on many reservations, allowing a number of tribes to achieve a measure of self-sufficiency. Yet as the decade came to a close, other tribes continued to suffer appalling social and economic strife.

The history of the federal government's relationship with the American Indian is a litany of deceit, hypocrisy and broken promises. In the early 1800s, the Supreme Court under Chief Justice John Marshall set the framework for that relationship, declaring federal sovereignty over tribal land and resources and creating federal responsibility for "domestic, dependent" Indian nations. (FN4) For the next fifty years the federal government exercised its sovereignty through treaties which negotiated "voluntary" cessions of land or simply extinguished Indian title in the event that tribal cooperation was lacking. In 1887, Congress abandoned the pretense of treaty-making and passed the Dawes Act, an attempt at forced assimilation which provided individual Indians with 160 acres to farm and allowed the government to sell "surplus" Indian lands -- a surplus that amounted to two-thirds of the 167 million acres previously reserved for the tribes. The reservation system was restored in 1934 with the Indian Reorganization Act, but that law stripped Indians of private ownership of reservation land and established a "communal" tribal council system of government that, in some cases, was foreign to tribal governance traditions. Federal policy shifted again in 1953 when Congress announced that the government was terminating its trust relationship with 109 tribes, another effort to force assimilation. This policy of "termination" stemmed from the 1948 Hoover Commission Report and culminated in the 1953 House Concurrent Resolution 108, which, in the words of political scientist and Native American activist Vine Deloria, Jr., "poisoned the atmosphere of federal relations" and conditioned Indians "to see problems and deceit behind every federal overture." (FN5)

In the 1960s, the administrations of John F. Kennedy and Lyndon Johnson rejected assimilation and tried to strengthen reservation economies. As was the case with so many New Frontier and Great Society programs, however, large sums of taxpayer dollars were wasted on ill-planned and mismanaged efforts to tackle the problem of reservation poverty. The Commerce Department's Economic Development Administration (EDA) spent $61 million to build 62 vacation resorts in Indian country, with hopes of employing over 6,000 Indians. The plan was a failure. The EDA then spent $784 million to build 55 industrial parks on the reservations, guaranteeing loans and grants to encourage businesses to occupy these properties. By 1980, numerous derelict remains of industrial parks and small factories -- with only a 5% occupancy rate -- stood in mute testimony to these poorly conceived programs. (FN6) At the same time, the 1968 Indian Civil Rights Act, while recognizing the cultural distinctiveness of the American Indian, only complicated the traditional relationship between tribal governments and the reservation populations.

This confused and ambivalent federal policy continued into the Seventies. During his presidency, Richard Nixon recognized that tribal self-government depended on reservation self-sufficiency. The 1974 Indian Financing Act established a loan fund available to Indians, and the 1975 Indian Self-Determination and Educational Assistance Act allowed the tribes to take over some of the programs and services previously administered by the Bureau of Indian Affairs (BIA) and the Indian Health Service. By this time, however, such efforts were gravely hampered by two obstacles: A growing perception in the non-Indian public that special compensations for the tribes infringed on its rights, and a deeply ingrained suspicion among Native Americans toward federal policy that caused many to see the ghost of termination lurking behind any federal initiative. (FN7)

As writer Sheryl Fragin put it, a "cold war" developed between reservations and outside commercial interests in the 1970s; a growing hostility worsened by the militancy of the American Indian Movement and court decisions which generally confirmed special rights for Indians. State groups opposed to the granting of these special rights joined in 1976 to form the Interstate Congress for Equal Rights and Responsibilities. Another factor was the national energy crisis and the dismal economy of the Seventies; corporate interests spent large sums of money in anti-Indian lobbying efforts designed to make the tremendous Indian country reserves of oil, coal and natural gas available for public consumption. (Approximately 25% of the mineral wealth of the United States is located on Indian reservations.) In addition, non-Indian workers, ranchers, sportsmen and state and local governments resented the "unfair advantages" Native Americans seemed to enjoy. In the Pacific Northwest, a 1974 court decision gave 50% of the off-reservation catch of salmon and steelhead trout to Indians, outraging sport fishermen. In Maine, a lawsuit filed by the Penobscot and Passamaquoddy tribes charged that Indians had a legal right to land used by 14 major paper companies. In the West, tribal efforts to exercise control over water, timber and mineral resources antagonized non-Indians. Tribes with substantial reservation energy resources created the Council of Energy Resource Tribes (CERT), described by critics as a kind of Indian OPEC, to maximize profits derived from royalties paid by oil companies for Indian country leases. By the late 1970s, intense and well-organized anti-Indian pressure produced a Congress increasingly hostile to Indian rights, exemplified by the defeat in 1978 of the Indian Child Welfare bill. (FN8) As Reagan would learn, the private sector's resistance to Indian sovereignty increased in relation to the success tribal entrepreneurs enjoyed, while state and local governments objected to the preferential tax treatment enjoyed by Native Americans.

Indian traditionalists staunchly opposed development, fearing negative cultural consequences and damage to reservation ecologies. Tribal members wrestled with the dilemma of participating in the national economy and at the same time preventing the erosion of traditional values. The reservation, as bad as conditions might be, was a refuge for traditionalists who sought to avoid contact with a dominant society that had treated them and their ancestors so poorly. (FN9) Another obstacle to the development of reservation economies was the traditional tribal method of distributing royalties and bonuses from oil and other leases on a per capita basis. In 1980, the Blackfeet, Northern Cheyenne, Wind River and Fort Peck tribes received $17 million in bonuses; each tribal member received a share amounting to $730. In 1986, the Blackfoot council distributed $800,000 to its members, amounting to $60 apiece. Collectivist habits coupled with abject poverty prevented tribal investment of income in a manner that might contribute to the creation of a continuing economic base. (FN10)

In addition, Indians received approximately $3 billion a year from twenty federal programs, and tribal councils had become clearinghouses for these funds. Some tribal members accused council leaders of channeling these federal payments into their own accounts, or threatening to deny funds or royalties to tribal members who disagreed with them on an issue or attempted to expose council corruption. On the Jicarilla Apache reservation in New Mexico, a tribal memberalleged that $3 million in tribal trust funds were converted into a family trust by one council member, while other tribal leaders were alleged to have used federal money to buy a $9 million ranch for another councilperson. According to National Review's Ted Williams, Native Americans suffered "under the twin burdens of economic socialism and political despotism." (FN11) Writing for Forbes, James Cook claimed that it was "one thing for tribal politicians to pad the payroll, pay off relatives, live off the fat of the pork barrel, and quite another to take financial risks with the tribal funds." (FN12) In 1986, Robert Belson, head of the Interior Department's Task Force on Indian Economic Development, remarked that tribal government too often acted as a "barrier to the entreprenuerial spirit." Indian entrepreneurs, when obstructed by the tribal bureaucracy, often simply left the reservation to start their businesses. Reagan's appointee to head the BIA, Cherokee leader and successful entrepreneur Ross Swimmer, complained that many tribes "look at economic development as a check from Washington." (FN13)

It would be unfair to suggest that the majority of tribal governments were corrupt or tyrannical. Nonetheless, the perception contributed -- along with traditionalist opposition, collectivist methods of income distribution, non-Indian resentment, Indian distrust of the private sector, and dependence on federal support -- to the inability of some tribes to create the cooperatives and corporations needed for successful interaction with the free market beyond the reservation boundaries. Such were the problems confronting the Reagan administration as it tried to implement its Indian policy.

Then, too, there were problems of Reagan's own making. Certain administration actions and pronouncements served to heighten Indian suspicion of the motives underlying the president's rhetoric. While federal Indian programs made up only 0.4% of Jimmy Carter's proposed FY1982 budget, those programs were targeted for 2.9% of the proposed Reaganite budget cuts. (FN14) Critics charged that the administration's policy was being determined in the Office of Management and Budget (OMB), where David Stockman's budget-cutting crew were grimly determined to reduce the size and scope of the federal government. The FY1982 Reagan budget reduced funding for Indian "safety net" programs such as the Economic Development Administration, the Community Health Representative program, HUD Indian housing (FN15) and the water and sanitation construction fund of the Indian Health Service. (FN16) Since on many reservations the primary employer was the federal government, which used Indians to staff health, housing construction, and other services, another effect of the budget cuts was to increase reservation unemployment. Among the Navajos, for instance, unemployment soared to 72% in 1982, up from 38% the previous year. Resulting from a loss of 1,200 CETA jobs, the Pine Ridge reservation's unemployment rate rose from 56% in 1981 to 72% the following year. (FN17)

As a money-saving measure, the administration combined 10 BIA programs into block grants, dispensing funds in lump sums to individual tribes so that they could allocate the money as they saw fit. While this initiative provided the tribes with more autonomy, it also required them to pay indirect administrative costs such as bookkeeping and insurance after the first year. Opponents claimed this violated the Indian Self-Determination Act, which obligated the federal government to pay both direct and indirect costs of programs administered by the tribes under contract with the BIA.

The FY1983 budget proposed additional cuts, including the abolition of the Economic Development Corporation, replacing the EDC's Indian development fund with one half the size, to be administered by the BIA. (FN18) The Indian journal Wassaja coined the phrase "sophisticated termination" to describe the new Indian policy, and some distressed and suspicious tribal members refused to take advantage of new programs that in the long run might have been beneficial to them. (FN19) They suspected, as one reporter put it, that Reagan was "pandering to their desire for independence while ignoring their needs." (FN20) The House Interior Appropriations Subcommittee pointed out that self-determination "cannot be achieved when the most basic needs such as adequate health care, decent housing and adequate education have not yet met." (FN21) Another factor -- the recession of 1982 -- contributed to the worsening of the plight of many tribes during the early Eighties. For instance, the Confederated Tribes of the Colville Reservation depended almost exclusively for its income on timber sales, but when the recession forced down timber purchases it had a devastating effect on the reservation's economy. (FN22) The oil glut of the early Eighties was bad news for some tribes; Wyoming's Arapaho and Shoshone tribes on the Wind River Reservation saw their mineral production income drop from $33 million in 1982 to $26 million the following year. (FN23)

Without the assurance of sufficient institutional supports in their pursuit of economic and political autonomy, Indians perceived that they were being forced to choose between the termination of their special relationship with the federal government and striving for self-sufficiency. Many were unwilling to risk their dependency. This goes far to explain Indian opposition to the abolition of the BIA, which was recommended by a 1984 presidential commission. BIA chief Ross Swimmer concurred with the commission, arguing that the tribes would fare better if they and not the government directed the use of federal funding. "Let Native Americans be put in charge of helping themselves to achieve economic independence," said Swimmer, because the BIA system encouraged dependency. (FN24) The problem, according to opponents, was that the proposal also required tribes to face the consequences of decisions they made in utilizing the funds. Writing in the New Republic, Hazel Hertzberg pointed out that the tribes had not "developed the management skills they need to administer tribal governments and tribal enterprises effectively." (FN25) Indian nations suffered from "distrust of change, shortage of skilled labor...and the absence of business expertise," according to World Press Review's Nicole Bernstein. (FN26) As a consequence, some Indians found themselves in the peculiar situation of fighting for the survival of the BIA, demonstrably an agency which had not always functioned with the best interests of the Native American at heart. (FN27)

By 1988, with the Reagan Recovery in its sixth year, there were numerous tribal success stories to which proponents of the new Indian policy could point as proof that it was indeed the answer for many tribes. It was success that could be attributed in large measure to administration policies and administration-supported legislation. One such law was the 1982 Indian Mineral Development Act, which allowed tribes to enter into a broad range of innovative non-lease agreements, such as joint ventures, that were common to the energy industry. Previously, tribes had been restricted to the lease method of development which prevented them from becoming actively involved in the management of mineral development activities on their reservations. The 1982 law gave tribes greater options to reap bigger profits while holding "the United States harmless from liability for any loss sustained by a tribe due to the approval of such an agreement," even as the "fiduciary obligation of the United protect the interests of the Indian tribes," remained intact. The Interior Secretary was required by the law to review any such agreements and inform the tribe of potential economic risk. According to Congressman Lujan of New Mexico, the legislation provided "Indian tribes with greater opportunity to swim in the economic mainstream of American society" and was much desired by resource-rich tribes as well as the administration, and "by companies willing to be partners with tribes in developing reservation resources." (FN28)

Another such law was the 1988 Indian Self-Governance Act, which allowed tribes to receive block grants directly from the Interior Department and allocate the funds as they saw fit, bypassing the BIA. Previously, as little as eleven cents out of every dollar set aside for Indian programs actually reached the tribes; the rest was consumed by BIA administrative overhead. By 1993, thirty tribes exercised more efficient control of federal dollars on the reservation than a bureaucrat in Washington could have done, and Congress extended the law until 1996. (FN29) With the support of the Reagan administration and (usually) the Supreme Court, some tribes began to flex their sovereignty muscles, imposing licensing and severance taxes on non-Indian businesses operating on reservations and demanding special hunting and fishing rights. (FN30) At the same time, the administration encouraged private sector participation in Indian country enterprise through such measures as the BIA's Loan Guarantee Program. This program, with a very low default rate of 5% on $90 million worth of gauarnteed loans by 1984, substituted a federal guarantee for the collateral private lenders would have otherwise expected from Indian borrowers. Reagan signed Public Law 100-442, which increased the ceiling on guaranteed loans for Indian businesses under the Indian Financing Act. Senator Mark Hatfield (R-Ore.) explained the program's value in a 1984 Senate speech:

In the past, tribes saw few alternatives but to turn to the Federal Government for direct financing
of their development projects....Today, tribes are rapidly gaining solid business experience and
expertise. As their knowledge grows, their awareness of the economic potential of their reservation
also grows, and...they are making the entrepreneurial commitment to grasp those opportunities.
Most importantly, these tribal ventures are sound business propositions that can stand on their own
without the need of direct Federal financial assistance." (FN31)

Hatfield went on to point out that the "unique relationship between tribes, tribal lands, and the Federal Government" created "certain hindrances," and that if "the rights essential to tribal recognition also prevent private lenders from realizing a true security interest for their loans, private finance and tribal economic development could seem at an impasse, despite the desire of each side to work together." (FN32)

Wall Street firms provided tribes with underwriting based on a broad interpretation of the 1982 Tribal Government Tax Status Act, especially after the 1986 tax reform resulted in a sharp decline in municipal bond underwriting. Tribes were specifically exempted from this reform measure. The underwriters used the large investment funds available in "blind pools" to sell tribal tax-exempts; for instance, Matthews & Wright joined with Oklahoma's Sac and Fox tribe to issue $125 million of 5.625 percent bonds so that the tribe could buy three-year, 7% bank certificates of deposits while considering the more risky endeavor of purchasing oil and gas wells. The tribe anticipated making $2 million over the three years of the CDs' term from the arbitrage between the certificate yield and the bond cost. E.F. Hutton and Bears, Stern underwrote $61 million in tax-free bonds so that an Arizona tribe could purchase a cement plant. As one tribal manager put it, we're getting all kinds of people knocking on our door," and tribes usually proved savvy enough to turn down offers they deemed too risky. (FN33)

Two of Reagan's key appointments, BIA Chief Ross Swimmer and Kenneth L. Smith, Assistant Secretary of the Interior for Indian Affairs, had presided over tribal success stories before joining the administration. Recognizing that many tribes did not have the "seed money" necessary for capital investment, Smith was convinced that "tapping the private sector" was the best solution. This meant "floating bonds -- revenue bonds, tax-free bonds -- leveraging the money we get from the government." As business manager for Oregon's Warm Springs reservation, this was precisely what Smith had done to start a forest-products operation that made the tribe self-sufficient to the tune of a net $10 million to $15 million a year in revenue. (FN34) The reservation invested in a recreational resort and home-building corporation and was the first tribe to receive a federal power license, permitting the operation of a hydroelectric generator in a Deschutes River dam; the tribe realized $4 million a year by selling electric power. By 1988, tribal revenues topped $65 million. (FN35) As a leader of Oklahoma's Cherokee nation, Swimmer had been instrumental in reducing his tribe's dependence on federal handouts. In 1975, 90% of Cherokee tribal income had come from the government; by 1989 that figure had been reduced to 40%. Cherokee Nations Industries, Inc. was grossing $24 million annually by 1988, producing military components. (FN36)

Under Swimmer's leadership, the BIA took on an advisory role. It hired three firms to create business development centers to help tribal entrepreneurs learn management skills and find financing for their enterprises. (FN37) Anticipating the 1993 recommendations of legal scholar Raymond Cross, Swimmer's BIA moved closer to becoming "a true service bureau that would assist the Indian tribes in effectively managing a balanced 'portfolio' of investments and assets." (FN38) It initiated a program providing 175 tribes and Alaskan Indian communities with grants to enable them to improve administrative skills. In its June 1984 report, the Interior Department announced that the BIA had provided $5 million in seed money to 21 tribal ventures which then attracted 75% of needed funding from non-federal sources. The same report showed that tribal income from mineral leases had increased 58.2% from the previous year's figure, totaling $396.3 million in 1982. (FN39) In 1984, the BIA issued the authorized limit of $13 million in its revolving loan program and asked for an increase of $2.5 million in its FY1985 authority of $16 million because it was holding over $6 million in approved loan applications from the previous year. (FN40) Swimmer also reformed Indian welfare payments by rewarding social workers for their success in finding jobs for their clients, reducing claimants by more than one-third. (FN41) By 1983, $235 million worth of programs had been turned over to Indian management by the BIA, including education, police and job training -- up from $50 million in 1976. (FN42)

Such measures encouraged tribal self-determination based on viable reservation economies. Among the tribes that took advantage of the new initiatives was Arizona's Papago tribe, which developed a tribal construction company that won an $800,000 contract to construct a shopping center and a $3.3 million contract for a school building. In addition, the Papago tribe established an Indian Foreign Trade Zone with the support of the Commerce Department. The Kiowa, Comanche, and Apache tribes of Oklahoma generated a $260 million development including a race track, theme park, and hotel-conference center. The Oneida tribe of Wisconsin used a $109,000 grant to leverage $10 million in funding for a multi-million dollar airport hotel. The Cherokee nation's horticultural project, supported by the Administration for Native Americans (ANA) and the Department of Health and Human Services, saw its assets increase from less than $150,000 in 1980 to nearly $1 million in 1983, and thereafter became self-sustaining. (FN43)

Casino gambling was the controversial avenue to self-sufficiency taken by some of the tribes that prospered during the Eighties. It started with bingo. By 1985, 80 of the 291 tribes recognized by the federal government ran bingo operations. One of the first were Florida's Seminoles, who claimed exemption from state regulations that did not apply to the reservation. Non-Indian opponents to Seminole exemption lost their cases in federal courts, and when the Supreme Court declined to hear such a case, other tribes followed the Seminole example, opening bingo halls of their own. Sheryl Fragin described the results in a Washington Monthly article:

Since opening their hall...the Seminoles have paid off the mortgage on the $1 million
building; created their own police force; started farming projects; and built libraries,
two gyms, and senior citizen and daycare centers. After just one year of operation, the
Shakopee Mdewakantan Sioux tribe of Minnesota paid out more than $1 million in
dividends to its members, put another $1 million into tribal programs, and still was able
to pay off the mortgage. Unemployment went from 67 percent to zero. It would be hard to
find a more stunning example of the kind of entrepreneurship and self-help that President
Reagan so eloquently promotes." (FN44)

Opponents charged that Indian gambling operations were prime targets for organized crime, and indeed there seemed to be some evidence to substantiate this claim. A member of the Cabazon band of Mission Indians in California was killed execution-style after accusing the tribe's bingo management company and its business manager of malfeasance. The case led to a Justice Department recommendation proposing legislation that would allow states to regulate Indian gambling. According to Fragin, however, bingo represented "the first stirrings of Indian economic independence," and Reagan's Interior Secretary, James Watt, pressured the Justice Department to abandon its proposal. (FN45) Reagan later signed the 1988 Indian Gaming Regulatory Act, which established an oversight commission and required tribes and states to enter into compacts for the operation of casinos, horse racing and lotteries. This law was a consequence of the 1987 Supreme Court decision, California v. Cabazon Band of Mission Indians in which the court ruled that states could not regulate Indian bingo without congressional authority if the game was legal in the state. The administration deemed the law a satisfactory compromise between the Indians who resisted any sort of regulation or oversight, for fear it might dry up private sector financing, and states that opposed unregulated gambling operations within their borders. (FN46)

Reagan was betting that the states would find no justification for shutting down most Indian gambling operations, and he was right. In fact, reservation gambling continued to spread rapidly. By 1992, sixty one tribes in 24 states were operating more than 100 casinos, realizing tax-free revenues amounting to $6 billion -- twice the annual sum of federal Indian aid in the 1970s and higher receipts than those brought in by all the Atlantic City casinos combined. (FN47) Despite Governor Lowell Weicker's opposition, Connecticut's Mashantucket Pequot tribe opened a $58 million casino -- the nation's largest gambling establishment -- with investment capital provided by Malaysian speculators and grossed $140 million in one year. (FN48) This casino, Foxwoods Resort, was drawing 25 million visitors a year by 1997. Such tourism benefited nearby towns, while the state received $500 million paid by the tribe between 1993 and 1997 out of slot machine profits. (FN49) In Wisconsin, 17 Indian casinos opened in a single year.

Recognizing the need to diversify, some bands invested their gambling revenues in other business ventures. The Oneida tribe of Wisconsin used gambling revenues to build a factory, an industrial park, a printing firm, a bank, a hotel, and four convenience stores. Tribes equated gambling revenues with empowerment and invested in the tribal infrastructure, paying for services ranging from health care to housing, from accredited tribal colleges to alcohol- and drug-treatment programs. Welfare payments declined; in Minnesota, where 16 Indian casinos were operating by 1992, Aid to Families with Dependent Children (AFDC) payments decreased for Indians that year while increasing statewide for all other groups. (FN50) The Oneida tribe also spent $11 million in 1995 to buy back land it had once owned. (FN51) With some justification, tribal spokesmen complained that the non-Indian backlash against Indian gambling had less to do with concerns about organized crime than with the fact that Indians were prospering thanks to unequal advantage. (FN52) On the other hand, a number of governors approved of Indian casinos as a good way to develop isolated rural sections of their states. (FN53) Facing budgetary woes as a result of Reagan's "New Federalism," more and more states in search of additional revenue turned to gambling in lieu of increasing taxes. This opened the door for Indians who, thanks to California v. Cabazon, could not be prevented from operating games that were legal elsewhere in the state.

Generally, though, did Reagan's new policy benefit American Indians as a whole? Between 1987 and 1992, Indian-owned businesses increased by 93%, numbering 102,234 by 1992. In comparison, the number of non-Indian businesses in the U.S. grew by 26% during the same period. (FN54) The nation's first business networking group for Native Americans, the National Indian Business Association (NIBA), was established in 1992. By 1996, the NIBA's membership included more than 24,000 Indian businesses. Another group, the American Indian Business Leaders (AIBL), is based on the premise that culturally-appropriate tribal businesses were not only possible but essential to continued Indian survival. (FN55) Undoubtedly some tribes benefited in terms of increased independence from federal largesse thanks to the initiatives and support of the Reagan administration. Nonetheless, by 1995, spending on federal Indian programs had increased to $6 billion a year, double the amount of annual set-asides a decade earlier. (FN56) This is partly due to the resistance of some tribes to participation in the free market. Part is due to the dramatic across-the-board escalation in social welfare spending by the Bush and Clinton administrations. And, too, it is partly a consequence of reluctance on the part of the federal bureaucracy to surrender its power and trusteeship. According to Joseph Kalt of Harvard's John F. Kennedy School of Government, the "higher the unemployment rate, the worse the poverty, the better off the BIA; it's budget rises, its staff rises, its power rises." (FN57)

Other statistics tell a more sober story in terms of how American Indians fared in the 1980s. Despite some progress, Indians remained the poorest group in society. While the income of white Americans increased by 12%, and black Americans by 8%, American Indian income remained relatively unchanged between 1979 and 1989. Therefore, the income gap between white and Indian households widened from 37% in 1979 to 54% ten years later. The BIA estimated Indian unemployment at 45%, even though the unemployment rate for Indian males dropped by about 5% between 1980 and 1990. Close to 30% of American Indians remained below the poverty line in 1989. (FN58)

One reason for this statistics may be the sharp increase in the number of tribes seeking and receiving federal recognition during the Reagan years. As of 1987 there were 464 recognized tribes, nearly double the number of a decade earlier. The 1970 census gave the American Indian population as 792,000; this increased to 1.37 million in 1980, and 1.9 million in 1990, with approximately 65% of that number enrolled in recognized tribes, and 60% of the growth due to changing identifications in the census. (FN59) Some Indians, lured by the success enjoyed by a number of tribes, recognized the advantages of formal recognition during the Eighties. One might say that the atmosphere created by the Reaganaut policy initiatives encouragedt his growth in the number of tribes, as Indians reclaimed tribal identities in order to qualify for "special dispensations" like seed money and Wall Street underwriting. That the unemployment and poverty rates were not higher in light of the sharp increase in American Indian population numbers testifies to the success of those policies. But it took more than formal recognition and federal support to unleash the entrepreneurial spirit on the reservation. Prosperity was not there just for the asking. The tribes that succeeded earned that success through a combination of skill, courage, hard work and determination.

Another persistent obstacle to Indian self-determination was a lack of institutional change in tribal government. Research has shown that those tribes which stubbornly adhered to notions of common property have done poorly in terms of achieving self-sufficiency. Economist Terry Anderson demonstrated that Indian Country agricultural output per acre was 85% higher on land owned by individual Indians compared to land held in trust by the tribes or the federal government. (FN60) The same dynamic operated in non-agricultural pursuits. This perspective contributes greatly to an understanding of why some tribes with abundant resources failed to prosper in recent years, while others with scant resources made great strides towards self-determination. Montana's Crows reside on a reservation rich in resources, including an estimated $26 billion in coal. Yet the Crows are one of the poorest tribes, with a 72% unemployment rate. Mississippi's Choctaw's, on a relatively isolated and resource-poor reservation, posted $100 million in sales in 1995 thanks to a wiring-harness assembly and general printing plant. (FN61) Why did the Choctaws succeed where the Crows did not? The Choctaws instituted constitutional reform and reinstated a strong tribal chief; the Crows were burdened with a tribal council numbering 10,000 members -- every individual in the tribe -- in a structure imposed upon the tribe by the 1934 Indian Reorganization Act, and one that was contrary to traditional Crow culture, in which individual rights were stressed and only limited power was given to chiefs. (FN62) Tribal entrepreneurs were unable to succeed without a certain measure of autonomy, which is unavailable in a central-planning system. (FN63) The Choctaws did not surrender their culture or their reverence for nature in order to succeed. As Anderson pointed out, the highly adaptable American Indian was no stranger to the concept of private property or individual initiative, despite myths to the contrary:

To develop collective sovereignty, Indians will have to return to the basics of individual sovereignty
and build from the ground up....[T]his approach...may seem inimical to the accepted mind set of
Indians as communal societies. However, assuming that a particular set of communal institutions
should govern individual relationships is, once again, imposing a set of rules from the top down. I
In contrast, self-determination begins with the individual, as it did prior to European contact. (FN64)

Tribal governments based on a collectivist approach, by their nature unable to function in a free market environment, continued to depend on federal trusteeship, which in turn promoted a self-perpetuating bureaucracy that did not always operate with tribal best interests at heart and that was fundamentally inefficient in the distribution of allocated funds. The collectivist approach stifled individual initiative, driving Indian entrepreneurs away from the reservation; it redistributed income in a way that prohibited the creation of an economic base; and it created an environment that was not conducive to private sector investment. In such cases, tribes remained more dependant on welfare than employment for income. (FN65) Until tribal governments were truly sovereign, said Anderson, and "able to bind themselves in ways that ensure returns on long-term investments, economic progress of reservations is likely to be elusive." (FN66) Effective self-government rather than resources, according to Nobel Prize-winning economist Paul Samuelson, was the key to economic self-sufficiency. (FN67) "Sovereignty," suggested Harvard's Stephen Cornell and Joseph P. Kalt, "is one of the primary development resources tribes now have, and the reinforcement of tribal sovereignty under self-determination should be the central thrust of Indian policy." (FN68) This was in fact the central thrust of Reagan's Indian policy, and those tribes willing to adapt to a changing world prospered because of it.

Reagan might have done more to encourage an even greater number of tribes to pursue self-determination and economic self-sufficiency, thereby freeing themselves of "paternalistic and ineffective policies implemented by government agencies such as the Bureau of Indian Affairs." (FN69) In hindsight, one could argue that had Reagan exempted federal Indian aid from his first-term budget cuts, at a time when a severe recession exacerbated reservation distress, he might have averted much of the hostility and suspicion which greeted his initiatives and spawned the charge of "sophisticated termination." Conceivably, in this scenario more tribes would have been willing to try new and innovative measures such as Reagan proposed. Reagan could have justified exempting all Indian aid by redefining it as appropriations akin to those set aside for support of developing nations. Both tribal members and non-Indian taxpayers would have benefited in the long run, for as tribes made progress toward achieving self-sufficiency, such appropriations could have been reduced, thereby also reducing tribal dependency on federal largesse -- the goal of all parties involved. But some tribes felt the need for the reassurance of steady federal support in their pursuit of economic autonomy.

In addition, Reagan could have stressed that the federal government, burdened with responsibilities to a multitude of interests -- Indian, private, state, and federal -- was uniquely unqualified to make decisions consistent with the best interests of the tribes. The basic premise underlying congressional interpretation of the trust relationship between the government and the tribes had proven destructively paternalistic, as it proceeded from the erroneous assumption that the tribes were inherently incapable of managing their own affairs. Reagan might have utilized his considerable communication skills to persuade leery tribal members that the "legal fiction of a federal trusteeship over tribal assets," as Raymond Cross described the modern-day public law shaping the Indian-federal relationship, was the biggest single obstacle to tribal economic, social and political development. In short, the president might have more clearly distinguished the concepts of federal wardship and federal guardianship of Indian interests, defining the former as constrictive (and misguided) policy encouraging tribal dependency and the latter as a framework for increased tribal sovereignty while retaining federal responsibility for protecting the tribes as they took their first steps into the economic mainstream of America. (FN70) Economic self-sufficiency, a necessary precursor to self-determination, was only possible for Indians if they were allowed to participate in the free market in ways they deemed best suited to their own needs and resources. Rather than preventing the Indian from participating on the assumption that he was unequal to the task, the federal trust responsibility should have been redefined as a duty to protect the Indian from some of the risks inherent in such pursuits. Tribes deserved special compensation, but not the kind that in the past had trapped them in a cycle of dependency.

In a very real sense, Reagan's vision was consistent with Chief Justice John Marshall's view of Indian tribes as "domestic, dependent nations." Prior to the 1980s, tribes were made more dependent than ever by federal policy while being robbed of any measure of the sovereignty crucial to national identity. Reagan wanted to craft a federal-Indian relationship in which the tribes would be treated much the same way as state governments. "This administration," he said, in his January 1983 policy statement, "believes that responsibilities and resources should be restored to the governments which are closest to the people served. This philosophy applies not only to State and local governments but also to federally recognized American Indian tribes." He asserted that his policy was designed to "reaffirm dealing with Indian tribes on a government-to-government basis and to pursue the policy of self-government for Indian tribes without threatening termination." (FN71.) His Indian policy met with some success because it created an atmosphere conducive to the unleashing of an entrepreneurial spirit on the reservation. Previous presidents provided the rhetoric in support of tribal self-determination. The Reagan administration turned words into action.


1. Ronald Reagan, "Statement on Indian Policy," January 20, 1983, Public Papers of the Presidents of the United States: Ronald Reagan, 1983, 2 vols. (Washington: U.S. Government Printing Office, 1984), I:96.

2. Ibid., I:96-99.

3. This assessment is derived from the 1979 report, Fulfilling Our Promises: The United States and the Helsinki Final Act, and summarized in George M. Anderson, "Native Americans and Energy Resources," America, 18 July 1981. The report was a public policy statement regarding Indian self-determination during the European Security Review Conference in Madrid in November 1980.

4. The foundation for public law governing federal-Indian relations resides in a trilogy of Supreme Court decisions: Johnson v. McIntosh, 21 U.S. (8 Wheat.) 543 (1823), Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1 (1831), and Worchester v. Georgia, 31 U.S. (6 Pet.) 515 (1832).

5. Vine Deloria, Jr., "Native Americans: The American Indian Today," The Annals of the American Academy of Political and Social Science, 454 (March 1981): 142-43.

6. James Cook, "Help Wanted--Work, Not Handouts," Forbes, 4 May 1987, 68-69.

7.For thorough and concise overviews of recent developments in federal Indian policy, see Marjane Ambler, "The Importance of Economic Development on the Reservations," Major Problems in American Indian History, ed. Albert L. Hurtado and Peter Iverson (Lexington, Mass.: D.C. Heath and Company, 1994), 553-555, and Alvin M. Josephy, Jr., "Modern America and the Indian," Indians in American History, ed. Frederick E. Hoxie (Wheeling, Ill: Harlan Davidson, Inc., 1988), 260-271.

8. Sheryl Fragin, "Indian Bingo Hall Showdown," Washington Monthly 17 (March 1985): 38. See also Eileen M. Stillwaggon, "Anti-American Agitation and Economic Interests," Monthly Review, 35 (November 1981): 28-41. For an examination of recent court decisions relevant to Indian rights, see Charles F. Wilkinson, American Indians, Time, and the Law: Native Societies in a Modern Constitutional Democracy (New Haven: Yale University Press, 1987). Anti-Indian forces are active in Congress today; for an example, see Timothy Egan, "Senate Measures Would Deal Blow to Indian Rights," New York Times, 27 August 1997, sec. A, pp 1, 12.

9. The experiences of the so-called "energy" tribes illustrates the complexity of Indian ambivalence to development. Thanks to the "rent-setting" aspect of federal trusteeship, select corporate concerns like Conoco, McGee and Gulf Minerals were given permission to develop Indian country resources, often paying below-average royalties. BIA-approved leases in the 1960s usually did not provide these tribes with a fair return, nor did the government give the tribes much say in how their mineral resources would be utilized. James Cook, "New Hope on the Reservations," Forbes, 9 November 1981, 108-115; Anderson, "Native Americans and Energy Resources," 33-34. In addition, oil companies sometimes under-reported production in order to pay less royalties, a practice continued well into the Eighties. Macon Morehouse, "Agency Paralysis Blamed for Oil Theft on Tribal Land," Congressional Quarterly Weekly Report, 13 May 1989, 1114-1115. CERT was created to address these inequities, but many Indians resisted the organization, deeming its policies destructive of tribal resources and traditions. In short, traditionalists had reason to distrust the BIA, private industry, and CERT.

10. Cook, "New Hope on the Reservations," 113-114.

11. Ted Williams, "On the Reservation: America's Apartheid," National Review, 8 May 1987, 30.

12. Cook, "New Hope on the Reservation," 114.

13. Cook, "Help Wanted--Work, Not Handouts," 71.

14. Art Winslow, "Reagan's Indian Policy: Speaking With Forked Tongue," The Nation, 12 February 1983, 177.

15. In lieu of the HUD Indian housing program, which it charged with waste and inefficiency, the Reagan administration proposed an alternative program funded, partially through block grants, at $151 million. Critics charged the new program was unworkable. See U.S. Congress, House. Representative Udall of Arizona, introducing a bill entitled the Indian Housing Act of 1983, 98th Cong., 1st sess., Congressional Record 129, pt. 3 (3 March 1983): 2980-81..

16. U.S. Congress. Senate. Senator Mark Andrew offering an amendment to S. 2166, a bill reauthorizing the Indian Health Care Improvement Act of 1976 through FY1988. 98th Cong., 2nd sess., Congressional Record 130, pt. 18 (12 September 1984): 25080. Andrew claimed that per capita expenditure for Indian health care decreased from $570 per patient in 1977 to $390 in 1984.

17. See Hazel W. Hertzberg, "Reaganomics on the Reservation," The New Republic, 22 November 1982, 15-18, and Winslow, "Speaking With Forked Tongue," 177-179, for these and other examples.

18. Hertzberg, "Reaganomics on the Reservation," 16-18.

19. Reported in Winslow, "Speaking With Forked Tongue," 177.

20. Ibid., 177.

21. Ibid., 178.

22. Hertzberg, "Reaganomics on the Reservation," 17-18.

23. Steve Huntley, "America's Indians: 'Beggars In Our Own Land'," U.S. News & World Report, 23 May 1983, 70-72.

24. Randy Fitzgerald, "Comeback in Indian Country," Reader's Digest, 135 (July 1983): 36.

25. Hertzberg, "Reaganomics on the Reservation," 16.

26. Nicole Bernstein, "The New Indian Capitalists," World Press Review, 30 (July 1983): 43.

27. U.S. Congress. House. Remarks concerning the administration's anticipated termination of the HUD Indian housing program, 97th Cong., 2nd sess., Congressional Record 128 (30 March 1983): 6050.

28. U.S. Congress. House. Remarks supporting S. 1894, subsequently passed by both houses, 97th Cong., 2nd sess., Congressional Record 128, pt. 16 (17 August 1982): 21333-21334.

29. W. John Moore, "A Winning Hand," National Journal, 17 July 1993, 1800.

30. For example, see Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982), New Mexico v. Mescalero Apache Tribe, 462 U.S. 324 (1983), and Kerr-McGee Corp. v. Navajo Tribe, 105 S. Ct. 1900 (1985).

31. U.S. Congress. Senate. Sen. Mark Hatfield's remarks supporting a bill to amend the Indian Financing Act and reauthorize the Loan Guarantee Program, 98th Cong., 2nd sess., Congressional Record 130, pt. 19 (21 September 1984): 26486.

32. Ibid., 26486.

33. Matthew Schifrin, "Smoke Signals," Forbes, 15 June 1987, 42-43.

34. James Cook, "Reaganomics on the Reservation," Forbes, 3 August 1981, 74.

35. Fitzgerald, "Comeback in Indian Country," 34.

36. Ibid., 30.

37. Cook, "Help Wanted--Work, Not Handouts," 71.

38. Raymond Cross, "De-Federalizing Indian Commerce: Toward a New Political Economy for Indian Country," Harvard Journal of Law and Public Policy, 16 (Spring 1993): 485.

39. William Clark and Margaret M. Heckler, "Moving Toward Self-Sufficiency For Indian People," Department of the Interior and the Department of Health and Human Services interdepartmental report (June 1984): 11-12.

40. U.S. Congress. Senate. Sen. McClure of Idaho proposing an amendment to increase the authority of the BIA revolving loan program for FY1985, 98th Cong., 2nd sess., Congressional Record 130, pt. 20 (2 October 1984): 28342.

41. "In The Red," The Economist, 25 February 1989, 25-26.

42. Huntley, "Americans Indians: 'Beggars In Our Own Land'," 70-72.

43. Ibid., 17, 21.

44. Fragin, "Indian Bingo Hall Showdown," 35. See also, U.S. Congress. House. Rep. Udall of Arizona, introducing legislation providing for regulation of Indian gambling operations, 97th Congress, 2nd sess., Congressional Record 129, pt. 24 (18 November 1983): 34184-34185.

45. Ibid., 37.

46. Martha Angle, "Congress Clears Legislation To Regulate Indian Gambling," Congressional Quarterly Weekly Report, 1 October 1988, 2730.

47. Pierre Brancon, "Betting With the Indians," World Press Review, 40 (December 1993): 36-37. W. John Moore, in "A Winning Hand?", puts the number of tribes engaged in gambling enterprises at 175 in 1992.

48. Prohibited from foreclosing in the event of default by tribal member debtors, commercial banks have often been leery of loaning money to reservation entrepreneurs; as a result, many tribes turn to private consortiums for funding. See Don A. Cozzetto, "The Economic and Social Implications of Indian Gaming: The Case of Minnesota," American Indian Culture and Research Journal, 19:1 (1995), 125.

49. Kathleen McCormick, "In The Clutch Of The Casinos," Planning, 63 (June 1997), 4-9. In addition, the tribe sponsored an $18 million waterfront rehabilitation project in Norwich, donated $5 million to the Mystic Marinelife Aquarium, and gave $10 million to the Smithsonian Institute's Museum of the American Indian.

50. Don A. Cozzetto, "The Economic and Social Implications of Indian Gaming," 123.

51. "Indian Reservations: How To Succeed, How To Fail," The Economist, 6 April 1996, 26. For other examples of how tribes used gambling revenue to diversify, see Anderson, "Indian War Cry: Cingo!," 2 January 1984, 58.

52. Moore, "A Winning Hand?," 1796-1800.

53. Don F. Hedwiger, "State Governors and American Indian Casino Gaming: Defining State-Tribal Relationships," Spectrum: The Journal of State Government, 69 (Fall 1996), 16-25.

54. Marketing Power Supplement, American Demographics 18 (November 1996): 6.

55. Shannon H. Jahrig, "Crossing the Cultural Divide: Organizational Support for Indians in Business," Montana Business Quarterly, 2 (Summer 1996): 2-3.

56. "How To Succeed, How To Fail," 25-31.

57. Ibid., 25.

58. Ronald L. Trosper, "Economic Conditions," Native American in the Twentieth Century: An Encyclopedia (New York: Garland Publishing, Inc., 1996), 177-178.

59. Russell Thornton, "Population: Precontact to the Present," Encyclopedia of North American Indians, ed. Frederick E. Hoxie (Boston: Houghton Mifflin Co., 1996).

60. Terry L. Anderson, Sovereign Nations or Reservations?: An Economic History of American Indians (San Francisco: Pacific Research Institute for Public Policy, 1995), 121-131.

61. "How To Succeed, How To Fail," 26.

62. Anderson, Sovereign Nations or Reservations?, 150-151.

63. Trosper, "Economic Conditions," 180-181.

64. Anderson, Sovereign Nations or Reservations?, 170-171. Anderson utilizes several recent studies which support his views; Stephen Cornell and Joseph A. Kalt, "Where's the Glue?: Institutional Bases of American Indian Economic Development," Malcolm Weiner Center for Social Policy Working Paper Series, H-91-2, (John F. Kennedy School of Government, Harvard University, 1991); James Lopach, Margery Hunter Brown, and Richard L. Clow, Tribal Government Today: Politics on Montana Indian Reservations (Boulder: Westview Press, 1990); and Jennifer Roback, "Exchange, Sovereignty, and Indian-Anglo Relations," in Property Rights and Indian Economies, ed. Terry L. Anderson (Lanham, MD: Rowman and Littlefield, 1992).

65. This conclusion is supported by the research of S.A. Levitan and E.I. Miller, The Equivocal Prospects for Indian Reservations (Washington, DC: The George Washington University, 1993).

66. Anderson, Sovereign Nations or Reservations?, 175.

67. "How To Succeed, How To Fail," 31.

68. Cited in Richard J. Cebula and Willie J. Belton, "Voting with One's Feet: An Empirical Analysis of Public Welfare and Migration of the American Indian, 1985-1990," American Journal of Economics and Sociology, 53 (July 1994): 280. See Stephen Cornell and Joseph P. Kalt, What Can Tribes Do? Strategies and Institutions in American Indian Economic Development (Los Angeles: UCLA American Indian Studies Center, 1992).

69. Cozzetto, "The Economic and Social Implications of Indian Gaming," 120.

70. Cross, "De-Federalizing Indian Commerce," 450.

71. Reagan, "Statement on Indian Policy," 96.